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February 2020

Authored by:

Liz Bowman and Dr. Qingchao Xu

CHINA IN THE ARCTIC

Policies, Strategies, and Opportunities for Alaska

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BIBLOGRAPHIC CITATION

Bowman, Liz, and Qingchao Xu. 2020. China in the Arctic: Policies, Strategies, and Opportunities for

Alaska. Fairbanks: Center for Arctic Policy Studies.

CONTRIBUTORS

Liz Bowman is a Graduate Research Assistant at the Center for Arctic Policy Studies and a Master of

Arts (MA) Candidate in the Department of Arctic and Northern Studies at the University of Alaska

Fairbanks. Liz holds a Bachelor's degree in International Studies from the University of Idaho. Her

research interests include Arctic international relations, particularly the role of non-Arctic states in

regional affairs.

Qingchao Xu, Ph.D., is Research Fellow and Director of the Center for Arctic Sustainability Studies,

China Institute for Innovation and Development Strategy (CIIDS), and Assistant Professor of

University of Chinese Academy of Sciences (UCAS). Both CIIDS and UCAS are affiliated to the

Chinese Academy of Sciences (CAS). Dr. Xu’s research interests include China’s Arctic policy and

strategy, Polar Silk Road, and Arctic sustainability. Her next project is to explore Arctic-related

cooperation between China, the United States, and Russia at state/province levels.

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Table of Contents

INTRODUCTION ............................................................................................................................................. 4

CHINA’S ARCTIC IDENTITY, POLICY AND STRATEGIES ...................................................................................... 7

CHINA’S ARCTIC ENGAGEMENT IN CLIMATE CHANGE, ECONOMIC AND SOCIAL DEVELOPMENT ................... 11

CHALLENGES AND OPPORTUNITIES FOR IMPROVED ALASKA-CHINA COOPERATION .................................... 16

CONCLUSION ............................................................................................................................................... 19

REFERENCES ................................................................................................................................................ 19

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Introduction

The objective of this report is to describe China’s policy and positionality in the Arctic and, more

specifically, to discuss the bilateral relationship between Alaska and China. As a non-Arctic state,

China has limited capacity to impact regional decision making directly. Consequently, China has

engaged Arctic stakeholders in order to increase its participation and influence within northern

regional affairs. For public and private sectors in Alaska and the U.S. more broadly, it is critical to

understand the role that China plays in the Arctic region already, as well as its plans for the future.

An accurate and unbiased analysis of the significant Arctic interests of China, as well as other nations

with whom the U.S. may currently have strained relations, is vital to the security of the region.

Understanding how other countries, in particular non-Arctic nations, perceive and operate in the

High North allows Alaska and the U.S. to create stronger and more beneficial partnerships in

business and other endeavors such as scientific discovery and search and rescue. Consequently, our

report is jointly written by scholars from both Alaska and China with expertise in their home

countries’ northern interests and policies. To frame this paper, the following two areas of inquiry are

considered. Firstly, how is China already working in the Arctic? More narrowly, what has shaped the

nation’s interest in the North from its internal political development and how does it view its

presence in the Arctic currently and into the future? Secondly, how should the state of Alaska

interpret this engagement and what role does the state play within the complex national relationship

the U.S. has with China?

The Arctic has a long-standing operational history of joint initiatives, primarily based on the region’s

inherent remoteness, environmental conditions, and lack of infrastructure. In particular, bi- and

multinational cooperation is strong in scientific endeavors. Areas of research that are already

flourishing include those related to climate and weather, where China is engaged heavily because of

known impacts of Arctic regional climate change on its domestic climate. For example, in 2018, China

and Iceland inaugurated a joint Arctic science observatory outside of Akureyri, Iceland.1 In an effort

to strengthen its Arctic science, China often draws comparisons between the Arctic and the “Third

Pole” region, high mountain and frozen sections of the Himalayas, in order to provide expertise and

support its justification for inclusion in Arctic research. This is because China has a long history of

cryospheric research in the Himalayan region, and it can use this expertise to its advantage in the

Arctic setting.

In order to better understand China’s role and address the questions noted above, this paper

discusses the following topics: China’s interests and concerns in the Arctic, China’s Arctic identity,

policy and strategies, as well as China’s engagement with climate change, economic and social

development. It concludes with a section specific to the China-Alaska relationship and where there

are opportunities for China and Alaska to expand collaboration.

China’s Interests and Concerns in the Arctic

From the perspective of the interaction between China and the Arctic, China has established its own

interests and concerns in the Arctic region largely driven by its domestic development. These

interests and concerns are mainly reflected in the areas of climate change, resource and energy

security (water and food security), and economic sustainability. China is highly concerned about the

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impacts of climate change, both in the present and over the long term.2 It has already started working

towards emissions reductions targets to mitigate the impacts of a changing global environment, as set

by the Paris agreement. For example, China has created approximately one-third of all wind turbines

and solar panels in the world, mainly for export, and is in the process of implementing domestic

policies to dramatically reduce coal consumption.3 As a result, China sees itself as a new leader in the

clean energy economy.4 In contrast, the U.S.’ Trump Administration actively resists policy aimed at

addressing global climate change, although there have been efforts at the federal level to provide

tools for communities facing immediate impacts related to climate change. For instance, the U.S.

Climate Resilience Toolkit, launched in 2014, helps communities identify and mitigate issues related

to climate issues.5 Efforts such as this are not touted by the Trump Administration and it is unlikely

that the formal U.S. position on climate change will vary over the next few years. This is because the

Trump Administration does not prioritize climate change issues and related policies. As a result, the

United States has opened up the opportunity for China to gain a competitive advantage and a

leadership role in regard to global climate issues, as demonstrated by China’s aggressive investments

in renewable energy, increased energy efficiency, and economic policies that focus on lowering energy

usage and greenhouse gas emissions.6

Moreover, China has serious concerns with the long-term viability of water and food resources

domestically. This is directly related to climatic changes such as warming in the north of China,

increased rainfall differentials between northeastern and southern China, and irregular patterns of

drought and floods.7 Additionally, China has linked increased days of haze pollution in Eastern China

to Arctic warming patterns and loss of sea ice.8 Although there is more research to be done,

scientists have noted a direct linkage between changes in the Arctic region and weather pattern

changes within China. Additionally, long-term studies have shown the Arctic Oscillation to impact

winter climate and precipitation events in China.9 Due to the lack of predictability and increased

variability brought on by climate change, there may be negative impacts on the agricultural industry in

China and a poor outlook for long-term food security. As a result of domestic weather and climate

changes, China is also facing an increase in desertification, which Chinese scholar’s link directly to

global climate change.10 This may also contribute to agriculture and food security issues in China.

The discussion of the Arctic within China varies from the discussion of China’s Arctic activities in the

international sphere. China embodies a more complex view of the Arctic region and the potential

that it may provide for domestic development and non-traditional security considerations. One of

China’s motivations within Arctic development include the economic prospects of Arctic sea

passages, most notably the Northern Sea Route, with variations listed in the map in Figure 1.11 This is

evidenced by China’s continued research and participation in dialogue, such as the Arctic Economic

Council or Arctic Circle forum, regarding shipping and related infrastructure.12 This interest is due to

several domestic factors, including increased pressure to identify shorter and faster shipping routes

for exports, as China houses six of the ten busiest container ports in the World.13

China is also concerned with its own long-term resource security and economic sustainability to

support its growing population. The Arctic has the potential to provide solutions to domestic issues

including food production and energy security. This is because the Arctic, which is warming at twice

the global rate, provides a unique environment to research food security, as well as options for

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importing food sources such as Arctic seafood, and active oil and gas extraction projects involving

China, which often include a percentage of raw materials returning directly to China. The rate of

food required within China strains its domestic land available for agriculture and, in turn, causes

increases in deforestation and degradation. Additionally, food security is a critical aspect of the

Chinese Communist Party’s legitimacy.14 China holds a great deal of technical expertise within

agriculture, which could be shared with Arctic partners in exchange for increased access to food

resources in the region.15 Moreover, China greatly outpaces the United States in terms of investment

in agricultural research. China’s official position on access to the Arctic is partly based on research

focused on climate change impacts to domestic food production. Likewise, China maintains important

ties to global energy as a net energy importer.16 Due to the state’s rapid economic development,

China’s total primary energy consumption is approximately 3.1 billion tons oil equivalent or 23% of

global energy consumption.17 As such, China has already invested heavily in the Arctic energy sector

in an effort to increase access to future resources.18 In Russia, China has an existing relationship with

Rosneft and Novatek via the China National Offshore Oil Corporation (CNOOC). Rosneft and

Novatek are Russian state-owned enterprises in the petroleum and natural gas industries. CNOOC

Figure 1. Map of China’s Commercial, Extractive, and Research Activities with commonly used

Northern sea routes. Map credit: Kelsey Aho.

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has a strong relationship to these companies, with offshore drilling activities in the Barents and

Pechora seas.19

China’s Arctic Identity, Policy and Strategies

To some extent, China’s cognition of its own interests and concerns in the Arctic defines its Arctic

identity in terms of political discourse. Moreover, in accordance with the Arctic identity, China

frames its Arctic Policy white paper and creates strategies and approaches to fulfill its goals. China

dates its involvement in Arctic affairs to the signing of the Svalbard Treaty (formerly known as the

Spitsbergen Treaty) in 1925, which established Norway’s sovereignty over the Svalbard archipelago

but grants signatories equal rights over resource exploitation and trade.20 Norway has defined

scientific research as a key economic activity in Svalbard, permitting many non-Arctic states to

establish a research foothold in Arctic science.21 It was not until 93 years after this first foray into

Arctic affairs, however, that China released a comprehensive Arctic policy. Between 1925 and China’s

re-emergence on the Arctic landscape in the early 1990s, China experienced important governmental

and cultural shifts that shaped its ability to engage with the modern Arctic.

In 1978, Deng Xiaoping instituted market reforms in China, which allowed for an astonishing 8-10%

annual GDP growth between 1980 and 1990.22 23 In the Arctic, the late 1980s and early 1990s made

way for a significant paradigm shift with the collapse of the Soviet Union and the dissolution of the

Cold War mentality. Many point to a transformational moment as Mikhail Gorbachev delivered his

1987 Murmansk speech, where he outlines specific steps that could be taken to ensure the Arctic

could function as a “zone of peace.”24 This speech provided some impetus for improvements

between the East and West and created space for conversation on the steps needed to achieve

greater Arctic cooperation.25 In the following years, the Finnish government responded with an

environmental protection initiative called the Arctic Environmental Protection Strategy (AEPS),

which was adopted in June of 1991 by the eight Arctic states: Canada, Denmark, Finland, Iceland,

Norway, Sweden, the Union of Soviet Socialist Republics (later Russia), and the United States of

America.26 The AEPS provided a basis on which to build environmental policy in the Arctic, and it

held meetings from 1993 to 1997, at which time the focus of the body shifted towards a merger with

the Arctic Council in 1996.27 Also in the early 1990s, as a result of its domestic economic stability,

China began investing in Arctic research, purchasing the Xuelong (Snow Dragon) icebreaker vessel

and undertaking its own research expeditions. As an emerging global power, China was well

positioned to start investigating how it could contribute to Arctic scientific endeavors. Since the

inception of the Arctic Council system, the attention towards the Arctic region has only grown. The

increased spotlight has created additional avenues for cooperation and new areas of emphasis

including economic development, social and cultural wellbeing, and scientific research.

Today, China self-identifies as a near-Arctic state, meaning that it is “one of the continental states that

are closest to the Arctic Circle.”28 In the meanwhile, China’s Arctic Policy white paper, a

comprehensive Arctic strategy published in 2018, also emphasizes that “China is an important

stakeholder in Arctic affairs.” Based on these two vital narratives, China is particularly concerned

with the environmental conditions of the Arctic region and the potential impacts that the region

poses for China’s own climate system, environment, and related economic interests.29 With a far-

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sighted vision, China maintains that it is leading the way towards a shared future for humanity

through increased participation in Arctic affairs and contribution to knowledge and development of

the Arctic in its research and economic activities.30 This is observable in China’s current five-year

plan, 2016-2020, where it has bridged the operational capacity gap between itself and many Arctic

states. For instance, China now has two polar icebreakers and more scientific infrastructure capacity

in the Arctic than any other non-Arctic state, including Yellow River Station in Svalbard, China-

Iceland Arctic Observatory, and the Xuelong and Xuelong 2 icebreakers.31

Guided by the thought of building a shared future for humanity in the Arctic, China’s Arctic Policy

white paper contains three overarching goals and several ways to achieve those goals. The three

goals are: understand the Arctic, protect the Arctic, and develop the Arctic.32 Within the remainder

of the policy, China has called out the following as key components for achieving these goals:

1) Deepening the exploration and understanding of the Arctic

2) Protection of the Arctic environment and addressing climate change

3) Utilizing Arctic Resources lawfully and rationally, including natural resources and tourism

4) Participating actively in Arctic cooperation and governance

5) Promoting peace and stability in the Arctic

In moving from policy to practice, China utilizes a range of strategies to gain political and economic

influence within international affairs. Some of these strategies have been useful for China’s

engagement in the Arctic, whereas others have worked well mainly in other regions of the world.

The most relevant strategies for China’s engagement in the Arctic are investment (including foreign

direct investment), the small states strategy, and bilateral engagements in the framework of the

Arctic Council.

Basically, China demonstrates both bilateral and multilateral approaches to achieve its policy

objectives, though it tends to rely more heavily on bilateral partnerships by seeking to work directly

with Arctic partners in order to achieve goals that are of common interest. In Canada, China has

invested approximately $34 billion in developing the energy sector (mostly oil sands) over the last

decade.33 This has allowed Canada to develop this industry quickly, while providing a new source of

energy for China’s markets. Similarly, China has multiple investments in rare earth mineral mines in

Greenland. China acknowledges that in order to be successful in the Arctic, it must create meaningful

partnerships with other Arctic stakeholders, as it cannot function without the support of regional

entities, therefore prompting the Greenlandic investments. 34 Due to Greenland’s home rule status,

these investments have drawn distinct opposition from the Kingdom of Denmark. Greenland has the

ability to make its own economic decisions, however Denmark still oversees much of their external

affairs. Given this status, any decision of Greenland’s that does not involve Denmark as a partner

often draws their intense criticism. China’s investment into the economy of Greenland has major

implications for both their economy and is what many would consider an ‘external affair’. Beside any

frustration over being left out of the investment negotiations, Denmark also fears that Greenland will

become dependent on such outside investments.35

These economic development strategies are beneficial for China, which is often working from a

position of economic power in bilateral arrangements. Foreign direct investment (FDI) is an

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investment made by a firm or person in one country into business interests located in a different

country.36 Foreign direct investment from China is appealing to other nations around the world as a

means to grow investment recipients’ respective industries and infrastructure. China uses this

strategy to its advantage – providing a financial mechanism to fund large projects that benefit its long-

term policy and strategy, such as the Belt and Road Initiative (BRI) discussed further below. To date,

there have been many successful investments that China has made in the Arctic region. Some of the

largest projects in the Arctic include the Arctic liquefied natural gas (LNG) projects in Russia, where

China owns a twenty percent stake in Novatek’s Yamal project.37 Its success has led to an expansion

of the LNG project. 38 China plays a similar role in LNG 2 and, likely in the near future, LNG 3.39

LNG 2 and 3 are additional phases of a long-term program headed by Novatek to produce liquidized

natural gas and related infrastructure, including transshipment terminals and storage facilities.40

China is also involved in the mineral resources industry, where it has partnered with other countries

to develop mineral resources. There are currently several Chinese-funded mines in Greenland, such

as the Kvanefjeld site, a controversial rare earth and uranium mine. This site was the subject of

scrutiny by the Danish government, which, after a long legal battle, let the mine continue in 2016

despite its reservations, which primarily concerned foreign interest in uranium production.41 As

discussed previously, Denmark’s primary concern is that Greenland will become too attached to

outside investments, which puts at risk their precarious political relationship with each other.42

Under the 2009 Self Government Act, Greenland has specified oversight over its own affairs,

including economic decision making, which in some instances becomes problematic for Denmark, as

it still oversees all aspects of foreign affairs for Greenland.43Denmark has noted many times that it

fears Chinese investments come with hidden political agendas that seek to draw Greenland away

from the Kingdom of Denmark.44 Although there is renewed interest in additional mineral

development, new sites are usually slow to develop due to fluctuating commodity prices and scrutiny

over foreign investments.45

The small states strategy is an approach that leverages partnerships and relationship growth with

smaller states. Smaller states generally have access to fewer domestic resources and as a result, they

can benefit substantially from bilateral and multilateral partnerships. Such a circumstance enables

larger countries like China to make such partnerships. By utilizing this strategy in the Arctic, China

would gain additional influence via its work with smaller and easier to engage partners. This would

specifically apply to China’s relationships with smaller countries in the Arctic, such as Iceland,

Denmark, Sweden, and Finland. One example of this is China’s ongoing free-trade agreement with

Iceland, which has led to improved relations in other sectors as well. A recent update to this

agreement includes new protocols for aquaculture trade, which allows Iceland to sell farmed salmon

products without tariffs.46 With the China/Iceland Free trade agreement signed in 2013, the volume

of trade between the two countries has increased from $401 million in 2014 to $712 million in 2018,

with an average annual growth rate of 20.6%.47 Furthermore, an investment that drew a great deal of

attention from international media was the Chinese Embassy in Reykjavik. Both Chinese and Icelandic

officials agree that the large size of the embassy was “built for the future,” which assumes

strengthened relations and an increase in shipping traffic.48 However, others see this as an excessive

show of friendship between China and a small state partner.49 This display of friendship is an

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important example, as it shows China as a strong and reliable partner to other small state actors in

the Arctic, which can influence how each may consider acceptance of support and investment from

China in the future.

The Arctic Council is the preeminent international forum for Arctic affairs and is also an important

stage for China to engage in the Arctic. The Arctic Council addresses a wide range of issues related

to scientific, environmental, and cultural topics. China, along with a cohort of other non-Arctic

states, was granted observer status in 2013.50 The main role of an observer to the Arctic Council is

to follow meetings and view the work of the body, however, those with observer status are also

encouraged to make relevant contributions at the working group level.51 Although China has

observer status and it cherishes this outcome after its arduous seven-year application, it does not

rely on the status for its Arctic involvement. Instead, China gravitates towards bilateral partnerships

in lieu of the multilateral engagement that the Arctic Council facilitates. For example, in its 2016

Observer Report, China stated that its largest contributions to the work of the Arctic Council

included attending Arctic Council and working group meetings, hosting meetings outside the auspices

of the council related to the Arctic, and appointing a minister of Arctic affairs.52 In comparison, other

observers reported more substantive contributions to the work of the Arctic Council, such as the

Republic of Korea’s funding of projects through the Protection of the Arctic Marine Environment

(PAME) working group. China participates in several of the working groups of the Arctic Council, but

it argues that the overall awareness of the interests and needs of non-Arctic observers within the

Arctic Council are not a priority of the member states.53 Based on this observation, China places less

value on the formal governance structure of the Arctic Council and more value on its bilateral

relationships and project arrangements directly with Arctic states.

Concerns about China’s position on Indigenous issues were subject to serious debate prior to the

admittance of China as an Arctic Council Observer in 2013. During the 2013 considerations, China

refused to express support of Indigenous people in the Arctic. This was noted by leaders from the

Inuit Circumpolar Council (ICC), Permanent Participants of the Arctic Council, at the 2013 meeting,

who expressed concerns about admitting a state that does not value the environment or respect

minority rights.54

Despite concerns, it was decided that admitting China was in the best interest of the Arctic states,

and the motion passed with consensus. Since the 2013 meeting, there has been a lack of significant

development regarding China’s approach to Indigenous issues in the Arctic. However, China did

make it clear within its Arctic Policy that Indigenous people’s rights in the Arctic are important and

should be respected alongside state sovereignty.55 The direct passage from China’s policy on these

reads:

To protect the Arctic, China will actively respond to climate change in the Arctic, protect its

unique natural environmental and ecological system, promote its own climatic,

environmental and ecological resilience, and respect its diverse social cultural and the

historical traditions of indigenous peoples.56

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Compared to other non-Arctic states, China’s approach to the Arctic is motivated by domestic self-

interest, receiving both positive and negative responses from the outside world. On one hand,

China’s approach to the Arctic is similar to the approach of other non-Arctic states. China wishes to

learn more about the region and develop its knowledge base as well as contribute to regional

research and dialogue in ways that are seemingly mutually beneficial to all parties involved. On the

other hand, unlike many other non-Arctic states, China takes this a step further by acknowledging

that the wellbeing of the Arctic region is not only for Arctic countries and Arctic peoples, but rather

encompasses the interests of the international community as a whole.57 In essence, China presents

itself as a strong partner that supports a common Arctic agenda for the global good. Such an agenda

includes climate change research, infrastructure development (particularly around coastal areas), and

energy and natural resource development. In order to be a viable partner in the region, China has

created a network of bilateral and multilateral arrangements with all levels of stakeholders in the

Arctic. This includes governments, corporations, and academic institutions. Likewise, China relies on

what it calls a “win-win” approach to the Arctic. However, this self-positioning is interpreted as all

participants in regional affairs having equitable responsibilities and benefits regardless of sovereignty

in the Arctic.58

China’s Arctic Engagement in Climate Change, Economic and Social

Development

China’s scientific agencies are very active in funding research on climate change due to noticeable

domestic impacts. China has thus prioritized research on the Tibetan Plateau area, also referred to as

the third pole environment (TPE) or third pole region. The TPE, much like the Arctic, is highly

sensitive to the impacts of climate change due to its large ice fields and pockets of snow-covered,

mountainous terrain.59 China has conducted research within the TPE to focus on the interactions

between water, ice, atmosphere, ecosystem, soil, and human activities.60 There are similarities

between the TPE and the Arctic, and China has leveraged these linkages to build on its Arctic

Figure 2. Timeline of China’s Engagement in the Arctic with Major Milestones 1925-2018.

Graphic credit: Kelsey Aho

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knowledge base and position itself as a strategic partner in Arctic research. For example, in 2018

China hosted a symposium specifically on connecting polar research to the TPE region.61 This

symposium focused on the commonalities of the climate systems in each area and served to provide

scientists a way to collaborate more closely.62 Because of its experiences with TPE research, China is

eager to collaborate with Arctic scientists on related research. In 2018, delegates from the Chinese

Academy of Sciences (Institute of Tibetan Plateau Research) hosted a special session during the

Arctic Circle Assembly meeting.63 This session featured several presentations and a panel discussion

to encourage new insight on research between the two areas and highlight the environmental

linkages across the north, south, and third poles.64

Scientific research is a large share of China’s engagement in the Arctic and China uses science to

justify its continued involvement in the Arctic region.65 China participates in many Arctic-based

scientific and professional organizations. There are several meaningful collaborations through

international institutions and related working groups, including the International Arctic Science

Committee (IASC), UArctic, Pacific Arctic Group (PAG), Intergovernmental Panel on Climate

Change (IPCC), and Asian Forum on Polar Sciences (AFPS). Each of these bodies provides a formal

venue through which China can work on Arctic issues. These organizations and groups are critical for

China’s maintenance of multilateral relationships in the Arctic.

There are two governmental research bodies in China that guide polar research. These are the

Chinese Arctic and Antarctic Administration (CAA) and the Polar Research Institute of China

(PRIC).66 The CAA and PRIC each have specific mandates to implement the Arctic and Antarctic

research agenda of China, and they therefore guide research objectives and provide funding. In

addition to the two agencies, there are a range of university and academic research units in China

that specialize in polar research, although few of these institutions are only Arctic focused rather

most are inclusive of both the Arctic and the Antarctic.

A few academic research centers exist as multilateral collaborations between China and Arctic states.

One example of this is the China-Nordic Arctic Research Center (CNARC) in Shanghai, China,

which coordinates research activities between four Chinese institutions and six Nordic institutions.67

CNARC maintains four main research themes: (1) Arctic climate change and its impacts, (2) Arctic

resources, (3) shipping and economic cooperation, and (4) Arctic policy-making and legislation.68

Additional sources of Chinese research on the Arctic come from various universities across the state,

including those affiliated with the Chinese Academy of Sciences (CAS). In 2018, the CAS issued a

press release stating that formal cooperation had begun between 15 Chinese universities, and a

formal polar research center, which has yet to be named, will be created.69

Over the past decade, China has increased its participation in Arctic conferences and as a result,

Chinese delegations have become more prominent in regional dialogue. One important forum that

has become central to the exchange of Arctic dialogue across political and academic arenas is the

Arctic Circle. The Arctic Circle is an international regional conference organization that brings

together practitioners of Arctic affairs, such as policymakers and business leaders, scholars and

people who live and work in the Arctic. China has been involved in some capacity since the

conference began in 2013.70 Its engagement started with attendance and has increased to speaking

engagements and moderating panel discussions. In May 2019, the Arctic Circle held a specialized

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meeting in Shanghai titled the “Arctic Circle China Forum”. The meeting focused on China’s

relationship with the Arctic, including topics such as the Polar Silk Road, governance, science,

transportation, and energy.71 Also worth noting is the China-Nordic Arctic Cooperation Symposium,

hosted by the China-Nordic Arctic Research Center. This yearly gathering started in 2014 and meets

on a predetermined topic related to Arctic social science research and how China can contribute.72

The Symposia in May 2019 focused on Arctic fisheries, the Polar Silk Road, and sustainable

development practices.73

China plays a complex role in Arctic economic development and will continue to do so for the

foreseeable future. As stated earlier, China has been involved in the Arctic since the region became

more open and globalized, coinciding with the fall of the Soviet Union. In the following decades,

economic development within the Arctic began to take shape. When discussing the potential for

natural resource development, scholars often cite a 2008 United States Geological Survey (USGS)

report, which estimated that the Arctic held approximately 30% of the world’s undiscovered gas and

13% of the world’s undiscovered oil reserves.74 China, likewise, views the Arctic as a potential energy

supplier for its large population and growing economy.75 The geopolitical risks are much lower in the

Arctic region compared to other regions in the world that are rich with natural resources, such as

Africa or the Middle East. This is due in part to the Arctic’s geopolitical landscape, which is based on

a history of openness and an established regional norm of cooperation.76 The largest geopolitical risk

Figure 3. Institutional layers illustrate China’s engagement in government (grey), economic

(orange), and science and education (green)

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is a ‘race for resources,’ which suggests that Arctic and Non-arctic States could take advantage of the

melting sea ice in the Arctic to competitively exploit newly available natural resources.77 China is

keen to do exactly this, develop available resources in partnership with Arctic states including oil,

natural gas, minerals, marine resources, and tourism, and is already active in many areas of Arctic

resource development. For example, China accounts for 50% of demand for Canadian minerals and

has positioned itself as an investment partner within the Canadian mining industry.78 Similarly, China

has a complex relationship with Greenland, operating in partnership with other states, such as

Australia, on several large rare-earth mining operations. China continues to seek permits for mining

operations in Greenland, as well as parts of the Canadian Arctic.79

Beyond natural resources, in practice China has a keen interest in developing long-term

transportation infrastructure through its vision of the ‘Polar Silk Road.’ The Polar Silk Road is an

extension of the approach to economic development underlying China’s Belt and Road Initiative

(BRI). BRI is a critical foreign policy objective of China’s President Xi Jinping.80 The principle of the

BRI is to create a network of highways, railways, ports, and pipelines that will link Beijing via the

Middle East to Europe, and later, Africa.81 To facilitate BRI projects and programs, China created

unique financial mechanisms for international development, including the Silk Road Fund, the China

Development Bank, and several state-owned companies.82 Thus far, approximately 900 projects have

been identified as a part of the BRI at an estimated cost of $900 billion.83

The Polar Silk Road is a separate policy from the BRI, but it is aligned in its approach to development.

This vision for the Arctic is to facilitate greater global trade and economic integration and, as such, to

allow China to vary its maritime routes and minimize its expenditures for global trade.84 Since 2018,

all aspects of the Polar Silk Road initiative are overseen by China’s Ministry of Natural Resources.

This has elevated the profile of the policy.85 Prior to oversight by the Ministry of Natural Resources,

all polar items were organized under the State Oceanic Administration subcommittee.86 This shifts

polar issues from the oversight of oceans and environment to a larger body that oversees natural

resources, including development.

The bulk of China’s infrastructure interests tied to the Polar Silk Road are linked to shipping along

the Northern Sea Route (NSR), as illustrated in the map earlier in Figure 1. Forecasts previously

projected that approximately 5-15 % of China’s foreign trade cargo (container ships) could be en

route over the NSR by 2020.87 We now know that these figures were overly ambitious, as polar

shipping routes, particularly for cargo vessels, are far too environmentally unpredictable at present.88

However, seasonal NSR usage can be more economical than the traditional route (which traverses

the Suez Canal) given Russia’s lowering of NSR tariffs.89 Recently, China’s Maritime Safety Agency

hosted a conference titled “Practice and Prospects on the Polar Silk Road,” which was set to

inventory China’s polar shipping capabilities and discuss priorities.90 This is a very serious issue for

China, and it is critical for Arctic states to pay attention to the developments of the Polar Silk Road.

Increased traffic and infrastructure can economically benefit Arctic communities along proposed

shipping lanes, but it also comes with increased risks for accidents in maritime and extremely remote

areas.91

Other areas of interest which fit within the ‘Polar Silk Road’ vision include Finland’s Arctic Corridor

project, which the Arctic business community has suggested could benefit China’s long-term strategic

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investment plans.92 The Arctic Corridor project will link Rovaniemi, Finland to Kirkenes, Norway by

rail, creating a formal linkage to mainland Europe from the Arctic Ocean.93 A project statement for

this initiative states that the “Arctic Corridor offers business and investors an opportunity to get

involved in major projects in Arctic Europe.”94 An additional component of this project includes fiber

optic cable laying, which will increase the availability of digital infrastructure in the northern reaches

of Scandinavia.95 The project states that the railway and accompanying infrastructure would benefit

Asia and lower the cost of international freight, as well as cut 20 freight days on cargo trips from Asia

to Europe.96 Although China is not yet directly involved in the project, there are targeted efforts by

the Arctic Corridor project, mainly business leaders in Finland and Norway, to bring China onboard.

The project site has listed a Chinese language investment brochure for the Arctic corridor project on

its website.97 Chairman Yang Erlin of the Finnish Chinese Business Council states that “private and

state investors from China are very interested in this project in terms of investment as well as

providing equipment and labor… they can raise the money. Now the biggest issue will be concerns

about the environmental impact.”98 A report published by the Finnish government confirmed that the

alignment of interests between Finland and China on this project could lead to an investment and

partnership on its implementation.99 However, the latest news as of December 2019 is that

continuous controversies within China over this proposed corridor has led to a negative evaluation

and final suspension support on the Chinese side.

The last specific objective within China’s Arctic Policy white paper is the promotion of sustainable

Arctic tourism.100 China views the Arctic region as a unique destination for its citizens. Tourists from

China are specifically interested in adventure travel and polar exploration.101 The growth of China’s

tourism to the Arctic is outpacing the growth of its outbound tourism as a whole.102 China has

suggested one way to create better involvement in Arctic tourism is to require specific training and

regulation for Chinese tourism agencies that operate in or offer travel to the Arctic.103 This is not a

new development for China, but rather one that is seeing renewed interest after the formal

publication of its Arctic Policy. Tourism industry experts note that one in three visitors to the Arctic

and Antarctic are Chinese.104 Chinese tourists focus on adventure experiences in the Arctic and

popular destinations include Finish Lapland, Iceland, and the North Pole (via Russia). In the past, there

have been attempts for private firms to purchase land in the Arctic to create tourism destinations

specifically for Chinese clients. In 2014, Huang Nubo, a Chinese billionaire, attempted to purchase

property in Svalbard to build a resort catering to Chinese tourists.105 This purchase failed when the

Norwegian Minister of Trade and Industry organized the purchase of the land instead in order to

protect it from outside interests.106 In a press conference, the Norwegian Minister of Trade and

Industry announced this action because “the Norwegian government has the best possible basis on

which to administer Svalbard for the Common good.”107 According to the western media, this is an

example of Norway acting as a protectorate of Arctic lands and imposing limitations on what outside

interests can do in the region. However, interestingly, a senior manager from Huang Nubo’s

Zhongkun group (an investment group) insisted in a telephone interview with Dr. Xu in August 2018

that their company never bid for the purchase of any land in Svalbard, though they did pay a business

visit to another place in Norway during that time. Though Nubo’s Zhongkun group were wondering

where these reports came from, they did not respond in public due to a previous failed investment in

Iceland and consequent media storm in which they involved both at home and abroad in 2011.

16

Challenges and Opportunities for improved Alaska-China Cooperation

In recent years, China and Alaska have developed a unique relationship based on shared interests in

trade, investment, and tourism.108 Because no state in the United States can make agreements with

any other nation or sub government per the Constitution, any participation in the international

governance of the Arctic by Alaska must be done so through the U.S. Federal Government. Both

public and private sectors in Alaska must therefore engage with China creatively, looking for

opportunities for cooperation between lower levels of government or within the private sector. The

following section explores this relationship, discusses potential roadblocks and proposes avenues for

future cooperation.

Based on data from 2017, China is Alaska’s largest trading partner. Alaska exports $1.3 billion in

goods annually, primarily seafood and natural resources, and an additional $135 million in services to

China.109 In 2018, China represented 21% of Alaska’s total goods exports.110 China imports nearly $1

billion of seafood per year from Alaska, which includes fish for Chinese consumption as well as

seafood that is processed for export from China to the global market. This constitutes approximately

54% of Alaska’s total seafood exports.111 According to the Alaska Seafood Marketing Institute, the

relationship between Alaska and China within seafood trade is extremely important and is currently

challenged by ongoing trade tension. It is important for Alaska to continue growing its relationship

with China within the seafood trade, as this is a significant market for the growth of Alaska’s seafood

economy. In order to do so, Alaska must continue to promote sustainable sources of seafood, which

is important to Chinese consumers.112

China is keen to grow its relationship with the state of Alaska directly, as tensions are high with the

U.S. Federal Government, particularly on trade issues. The ongoing trade war between the Trump

Administration and China has complicated the economic relationship between the two countries. For

instance, tariffs imposed on seafood in 2018 have resulted in a 36% drop in U.S. seafood sales, valued

at approximately $340 million.113 If tariffs on Alaska products are not eased, long-term impacts could

lower the demand for Alaskan seafood in China.114

The most positive China-Alaska development of late occurred during the Walker Administration,

from 2014 to 2018. China Petrochemical Corporation (Sinopec), in collaboration with the Bank of

China and China Investment Corporation, agreed to partially finance an Alaska LNG pipeline

connecting the North Slope with the Pacific Ocean (see Figure 4).115In order to facilitate this

agreement, former Alaska Governor Walker led an extensive trade mission to China in May/June of

2018.116 As a part of the mission, Governor Walker traveled with Alaskan business representatives

with the aim of strengthening the trade relationship between Alaska and China.117 This has since

been put on hold for a variety of reasons, including domestic oil companies’ loss of support with the

high cost of LNG at current market rates.118 If the global rate of LNG were to increase, the

development of the pipeline would likely be expedited.

The current executive leadership of Alaska, Governor Dunleavy, has shown less interest in this

international engagement and is focused on natural resources development financed by domestic

companies. One indication is the downsizing of the Alaska Gasline Development Corporation

(AGDC), which oversees the Alaska LNG project.119 The department eliminated 50% of positions and

17

those that remain are focused on completing the draft environmental impact study for the Federal

Energy Regulatory Commission (FERC).120 In addition, the non-binding joint development agreement

for Alaska LNG, which was signed between the Walker administration and three Chinese firms, has

not been renewed.121Although the president of AGDC Joe Dubler in an interview by the author in

October 2019 was quite confident about getting federal authorization for the Alaska LNG deal by

June 2020, the Dunleavy administration is not asserting the same level of effort as the Walker

Administration, likely due to a combination of falling LNG prices and interest in other domestic

investments.

The near future challenges for the Alaska and China trade relationship will be identifying new

priorities of the governor’s office and where China’s collaboration can fit into the current

administration’s goals. For the Alaskan legislature, this may mean exploring new opportunities with

China or capitalizing on existing ones. Before this can happen, however, the state will need to outline

its priorities for engagement directly with other countries. Currently, China is a significant trading

partner for Alaska. In 2018, Alaska exported approximately 80,000 tons of salmon to China, with a

value of approximately $300 million.122 One of Alaska’s next hurdles will be identifying additional

opportunities that can be pursued with the support of the U.S. Department of Commerce, which

oversees both domestic and international commerce activities. It will be critical for the state of

Figure 4. Proposed AK LNG Pipeline, image from Alaska Gasline

Development Corp.

18

Alaska to harmonize its interests with China in order to maximize its economic benefits, whilst

staying within its legal bounds. Due to the ongoing tariff situation between the U.S. and China, many

industries are under increased pressure, including seafood. According to Sam Karson, a legal scholar,

Alaska is within its constitutional rights to pursue an economic relationship with China directly, so

long as it does not interfere with U.S. national security interests.123 This idea gives Alaska some space

to pursue economic activities of mutual interest directly with foreign countries. An unlikely example

of where this activity would be blocked is if Alaska decided to pursue a telecommunications venture

with Huawei, a Chinese company that the Trump Administration has limited specifically due to

national security concerns.124

On a positive note, Alaska and China have several common economic development goals. Areas for

potential collaboration include the development of Alaska LNG, offshore oil development, sustainable

Arctic tourism, fisheries and seafood, and development of logistical resources - such as an air cargo

hub and Arctic port infrastructure. Currently, the largest barrier to economic cooperation is

unknown and fluctuating tariffs enacted by the Trump Administration. At this time, it is unclear what

impact the January 2020 U.S.-China trade deal will have on the Alaska-China relationship.125

To address the increasing uncertainties for future bilateral economic cooperation imposed by the

ongoing trade war, Alaska and China need to work together at different levels. Amongst possible

measures to take, keeping cultural exchanges and communications open among peoples is worthy of

encouragement in the long run for better Alaska-China relations. Fortunately, a good basis in this

point has been established between Alaska and China over past decades. For instance, Alaska has a

long-standing sister state/sister province relationship with Heilongjiang Province. Additionally, the

Municipality of Anchorage has recently re-established a sister city relationship with Harbin,126 the

capital city of Heilongjiang Province. In October 2018, Alaska’s governor, with the Heilongjiang

Province governor, announced that year-round passenger flights between Alaska and Harbin would

become a reality as early as 2020 (shown in the map in Figure 5). Furthermore, academic

Figure 5. Proposed nonstop flight route between Anchorage and Harbin

19

collaborations can move forward with partnerships in research, such as the recently re-signed

memorandum of understanding between the University of Alaska Fairbanks’s International Arctic

Research Center (IARC) and the Chinese Academy of Sciences (CAS). This agreement is meant to

bridge research divides and create a stronger environment for academic collaboration and people-to-

people exchanges between the institutions. In this context, the dynamics of Alaska-China

cooperation are still in the hands of the people.

Conclusion

China is extensively involved in the Arctic. It continues to maintain a strong position in various

economic ventures despite a lack of physical territory in the Arctic. It has found success in pursuing

projects and initiatives of mutual interest between itself and Arctic partners. As with any significant

global power, China’s interests are many and varied, so it shares some interests with Arctic states. As

such, China has found success in partnering with Arctic states and institutions for activities of mutual

interest, including natural resource extraction, climate research, and infrastructure development. At

the same time, China also suffers from failures in investment on infrastructure in the name of the

Polar Silk Road and negative impacts imposed by the ongoing trade war. These are emerging

tendencies, deserving more attention from the industrial arena and academic realm in particular.

Scholars continue to debate whether the international community should view China’s increased

engagement with the Arctic as an opportunity for collaboration or a challenge to cooperation.127 This

is because it is not clear if China is motivated by national interests, such as energy security and food

security, or for the betterment of the global community, as in global climate research, or both.

Undoubtedly, frequent and in-depth communications at a variety of levels between Alaska and China

will give insight into answering this question. Therefore, in the case of Alaska, working with China on

Arctic initiatives should be considered, but with great awareness of the potential geopolitical and

economic risks.

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24

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123 Sam Karson, 2019.

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